Basic Finance Tutorial - Week 4
Banks: “Lying Down to Earn Money”
· Four major state banks (ICBC, ABC, BOC, CCB) in China
· Main profit: deposit–loan spread
· Next: investing deposits into safe assets (90 % gov bonds)
· Service channel fees
· Stronger deposit ability = more profit
Deposit–Loan Spread Factors
· Scale of funds
· Maturity matching
· Risk management
Golden Decade of Banking
· High monopoly threshold, strict licence
· China’s economy surged, high profits
· Threshold now lower, competition rising
Money‑Market Funds
· Inter‑bank market short‑term huge sums, high rate
· Retail barred, MMF pools money to enter
· Yield > bank deposit; rate follows liquidity (ample → low, crunch → high)
Fund Selection Tips
· Look at macro: bull = index, bear = bond
· Look at industry expertise
· Look at timing: RRR/rate cuts favor bonds
· Look at brand: long‑history, big houses
Fund Pitfalls & Experience
· Understand fees: online cheapest, bank sales dear
· Avoid high‑frequency trade
· DCA add more in bear market
· Hold >3 years boosts win rate
· Buy within valuation safety margin
Shadow Banking
· Banks + trusts bypass regulation
· Capital efficiency ↑, retail risk ↑
· Big‑bank packaging but risk nature unchanged
· Suggestions: read prospectus, verify channel, check fund‑raiser, beware high promised yields
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